In Michigan State, a piece of legislation covering procedures and attitudes in auto glass repair claims was recently passed on to the Senate.The bill, S.B. 0306, was put forward in March of this year by Senator Joseph Hune and deals specifically with the insurance code that regulates third-party administrators in the auto glass industry.

Among the provisions of S.B. 0306, which generally covers restrictions and fresh regulations to be imposed on third-party administrators’ conduct, are the following:

‒ prohibition on third-party administrators for insurers to offer auto glass services unless the TPA agrees to a specified code of conduct that ties in with the other provisions of the legislation

‒ regulation that a policyholder names a particular auto glass repair or services shop on the TPA’s network as his or her preferred shop, the TPA and insurer are prohibited from suggesting another auto glass facility as an alternative

‒ provision that third-party administrators are also prohibited from closing their networks to fresh applicants under the provisions of the bill if the concerned network happens to include facilities that the TPA owns or which are affiliated with the TPA

- provision that if the policyholder does not state a specific auto glass repair and services shop as his or her preferred option, the TPA may suggest three facilities from the network but may only do so under the premise that “objective basis” be exercised in determining these three facilities, and not a self-interested set of standards that would necessarily privilege the TPA’s affiliated or owned facilities

It should be clear from these general notes that the bill is primarily concerned with making the activities of third-party administrators more transparent and fair to other businesses.The codes of conduct the bill in question is trying to establish are ones that are aimed specifically at protecting independent businesses by preventing TPAs from “herding” or “leading” customers/policyholders to their own auto glass repair stores or affiliated facilities whenever a glass claim is put forward, as indeed has been the allegation made against many major third-party insurance administrators at the moment.

The claim is serious: in the auto glass market, a staggering majority of the business comes from insurance companies.Very few people actually go to get something such as a windshield repair or windshield replacement and pay for it out of their own pockets—it is far more common to see someone going to an auto glass shop through referral from his insurance company and sending the bill to that same insurer.Since most TPAs at the moment also happen to have large auto glass repair facilities, there is a very real fear from many independent glass shops that their bigger counterparts shall be having an unfair edge over them in the market, which already tends to favor those with more capital from which to draw.